Swiss group Glencore to enter Japan LNG market

LNG is traded under either long-term contracts that can span more than two decades or short term contracts of four years or less. Glencore will focus on short-term spot trading, giving it flexibility to switch customers based on prices and increase earnings. The firm will utilize its existing sales network.

The firm will use Morgan Stanley traders in London and
Singapore to handle LNG purchases, and also assign personnel to
Tokyo. The staff will be expanded if necessary.

LNG is traded under either long-term contracts that can span
more than two decades or short term contracts of four years or
less. Glencore will focus on short-term spot trading, which
will allow it to flexibly switch customers based on prices and
increase earnings.

The company currently sells steam coal to utilities and
coking coal to steelmakers in Japan. Annual trading volume is
about 35 million tons, or around 20% of the Japanese market.
The firm will utilize its existing sales network for LNG
distribution.

Demand for LNG in Japan is rising as many nuclear power
plants remain idle after the March 2011 earthquake. Power
companies are planning to increase imports from the United
States and Russia in the medium term to secure stable supplies
while curbing costs.

With the Japanese market expanding, resources firms
worldwide are stepping up sales of LNG in Japan. Britain's BG
Group Plc set up a Japanese branch early this year. And oil
companies including BP Plc are also boosting sales.

Such advances by foreign firms could increase spot trading
and spur competition among suppliers, potentially lowering fuel
costs for power companies.

Dow Jones Newswires

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